Watch Out For No. 3

Anna's Linens is known for the discount prices at its grand openings. So even before it unlocked the doors of its 100th store, bargain-hunters began lining up. “We will sell close to 8,000 to 10,000 of our 99-cent towels towels on a first day,” says founder Alan Gladstone.

While Costa Mesa, Calif.-based Anna's, named for Gladstone's mother, is third in its market, behind Bed Bath & Beyond Inc. and Linens N Things Inc., it has proven it can stand up to the giants (unlike Strouds, which closed this year).

“The reason why Anna's Linens does so well in such a competitive market is that it goes after a particular clientele,” says Terry Soldati, vice president of sales and merchandising for Revman International, a New York-based home textile company.

Anna's Linens' typical trade area is densely populated with at least 250,000 people, with household incomes between $35,000 and $55,000 and a large ethnic population.

“They can go into a market and know what's going to be the ‘A’ store, ‘B’ store, etc., and the volume to expect in each location,” says Ed Moss, president of E. Moss Associates Inc., a Tarzana, Calif., manufacturer's rep firm that has worked with Anna's Linens for many years. “That's why they are able to move into a new market quickly with multiple locations.”

And that's exactly what it's doing. Now only in nine states, Anna's is on the expansion trail. It expects to have opened 40 stores by year's end, with plans for another 160 in the next three years. “We want to put Anna's Linens in every major U.S. city,” says Gladstone.

A VOID TO FILL

Anna's Linens, created in 1988 after two discount chains — Zody's and Gemco — failed, is an unabashed discounter. “Zody's and Gemco had positioned themselves to go after this customer and they both went out of business in the mid-1980s,” explains Gladstone. “I felt there was a $100 million void, and I wanted that business.”

Initially, Gladstone went after Zody's and Gemco locations. These days, the store site selection process is more sophisticated. The company recently hired Pat Barber, who held a similar position at 400-store grocery chain Ralph's/Food 4 Less, as senior vice president of real estate.

“We like to be with a big box,” says Gladstone. “The ideal center for us would be a Wal-Mart supercenter, but we also like to be with Target, Home Depot, Lowe's, Ross, TJ Maxx and Marshall's. We like some other reason for coming to a center besides Anna's Linens.”